Duke Energy 2011 Annual Report Download

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2011 Annual Report and Form 10-K
Well positioned.

Table of contents

  • Page 1
    Well positioned. 2011 Annual Report and Form 10-K

  • Page 2
    ...Headquartered in Charlotte, N.C., Duke Energy Corporation is one of the largest electric power holding companies in the United States. A Fortune 500 company, Duke Energy is listed on the New York Stock Exchange under the symbol DUK. More information about Duke Energy can be found at: www.duke-energy...

  • Page 3
    ... Rogers Chairman, President and Chief Executive Officer Dear Stakeholders: The cover of this year's annual report shows the pinnacle of the Duke Energy Center, our new corporate headquarters in Charlotte, North Carolina. It is a visible reminder of the stability of our company and our optimism for...

  • Page 4
    ... to adjust customer rates in order to recover expenses and capital investments in our modernization program. State utility regulators approved these settlements in early 2012, and the revised rates are now in effect. In Ohio, we gained approval of our Electric Security Plan (ESP). The new ESP...

  • Page 5
    ... years. (This excludes tax-exempt financings and international/project financings.) We expect to issue approximately $2.2 billion of debt in 2012. The current low-interest-rate environment helps us mitigate rate increases needed to recover our costs to DUKE ENERGY CORPORATION 2011 ANNUAL REPORT 3

  • Page 6
    ... Executive, Chief Generation Officer and Chief Nuclear Officer James E. Rogers Chairman, President and Chief Executive Officer B. Keith Trent Group Executive and President Commercial Businesses Lynn J. Good Group Executive and Chief Financial Officer 4 DUKE ENERGY CORPORATION 2011 ANNUAL REPORT

  • Page 7
    .... We would expect these new rates to go into effect in 2013. Positioned for regulatory success Building advanced power plants - and improving the environmental performance of existing plants - doesn't come cheaply. Power plants take years to permit and DUKE ENERGY CORPORATION 2011 ANNUAL REPORT 5

  • Page 8
    ... in Ohio. The returns from our Ohio retail electric business have declined over the past several years, as customers switched to other generation suppliers with lower market-based prices. On November 22, 2011, the Public Utilities Commission of Ohio (PUCO) approved a new ESP for Duke Energy Ohio...

  • Page 9
    ...plant at our Buck Steam Station in North Carolina came on line at the end of 2011. The 825-MW Cliffside advanced coal-fired plant and the 620-MW Dan River combined-cycle natural gas plant, also in North Carolina, are on schedule to be in service this year. DUKE ENERGY CORPORATION 2011 ANNUAL REPORT...

  • Page 10
    ...coal. In fact, our new Buck gas-fired, combined-cycle plant in the Carolinas is now being dispatched before our largest and most efficient coal plants - a sign of today's historically low gas prices. Will this last? Commodity markets are cyclical, and natural gas prices have historically been highly...

  • Page 11
    ... performance Increasing the quarterly dividend by approximately 2 percent during 2012, subject to board of directors approval Obtaining constructive regulatory outcomes in our pending merger with Progress Energy, in cost recovery for Edwardsport, and our planned rate cases in the Carolinas...

  • Page 12
    ...its predecessor companies from 1995-2006 Daniel R. (Dan) DiMicco Chairman, President and Chief Executive Officer Nucor Corp. Member, Compensation Committee, Corporate Governance Committee Director of Duke Energy or its predecessor companies since 2007 10 DUKE ENERGY CORPORATION 2011 ANNUAL REPORT

  • Page 13
    ... Technology Officer B. Keith Trent Group Executive and President - Commercial Businesses William F. (Bill) Tyndall Senior Vice President - Federal Government and Regulatory Affairs Jennifer L. Weber Group Executive, Human Resources and Corporate Relations DUKE ENERGY CORPORATION 2011 ANNUAL REPORT...

  • Page 14
    ...Gas 44% Coal 41% customers primarily in Ohio Renewable 12% with generation and other Other 3% energy services at competitive rates. Commercial Power also includes Duke Energy Generation Services (DEGS), an on-site energy solutions and utility services provider. â- Coal Natural Gas/Fuel Oil Nuclear...

  • Page 15
    ...potential construction of nuclear facilities, including environmental, health, safety, regulatory and financial risks; the timing and extent of changes in commodity prices, interest rates and foreign currency exchange rates; unscheduled generation outages, unusual maintenance or repairs and electric...

  • Page 16
    ... Goodwill and other impairments $ (660) Voluntary retirement plan & office consolidation costs (172) Costs to achieve the Cinergy merger (27) Litigation reserve (26) Asset sales 248 Mark-to-market impact of economic hedges 33 Total adjusted EPS impact 14 DUKE ENERGY CORPORATION 2011 ANNUAL REPORT

  • Page 17
    ...Tax Effect $ 83 30 27 17 Crescent project impairments $ (214) Emission allowances impairment (82) Mark-to-market impact of economic hedges (75) Costs to achieve the Cinergy merger (44) Total adjusted EPS impact Duke Energy's 2011 Annual Report also references Duke Energy's forecasted 2012 adjusted...

  • Page 18
    ... basis. This new reporting measure will involve an allocation of interest and taxes as well as previously unallocated corporate costs to each of the segments. Other will primarily include captive insurance results and interest expense on the direct debt of the Duke Energy holding company. When used...

  • Page 19
    DUKE ENERGY CORPORATION 2011 FORM 10-K

  • Page 20

  • Page 21
    ...Act of 1934). Duke Energy Yes ' No È Duke Energy Carolinas Yes ' No È Duke Energy Ohio Yes ' No È Duke Energy Indiana Yes ' No È Estimated aggregate market value of the common equity held by nonaffiliates of Duke Energy Corporation at June 30, 2011 25,020,000,000 Number of shares of Common Stock...

  • Page 22
    ...-looking statements, whether as a result of new information, future events or otherwise. FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2011 Item PART I. DUKE ENERGY CORPORATION (DUKE ENERGY) 1. BUSINESS ...GENERAL ...U.S. FRANCHISED ELECTRIC AND GAS ...COMMERCIAL POWER ...INTERNATIONAL ENERGY ...OTHER...

  • Page 23
    ... Ohio, and Duke Energy Indiana DukeNet ...DukeNet Communications, LLC DukeSolutions ...DukeSolutions, Inc. EPA ...U.S. Environmental Protection Agency EPS ...Earnings Per Share ERISA ...Employee Retirement Income Security Act ESP ...Electric Security Plan ETR ...Effective tax rate FASB ...Financial...

  • Page 24
    ...& Poor's SSO ...Standard Service Offer Stimulus Bill ...The American Recovery and Reinvestment Act of 2009 Subsidiary Registrants ...Duke Energy Carolinas, Duke Energy Ohio, and Duke Energy Indiana TSR ...Total shareholder return U.S...United States USFE&G ...U.S. Franchised Electric and Gas Vectren...

  • Page 25
    ... of South Carolina (PSCSC) and approval of the joint dispatch agreement by the PSCSC. Although there are no merger-specific regulatory approvals required in Indiana, Ohio or Florida, the companies will continue to update the public service commissions in those states on the merger, as applicable and...

  • Page 26
    ...: retail trade, government, financial, health care and education services. Duke Energy Indiana's 2011 industrial and general service sales were concentrated in the aforementioned sectors. The number of residential, general service and industrial customers within the USFE&G service territory, as...

  • Page 27
    ... market conditions and fuel costs. Energy Capacity and Resources For information on USFE&G's generation facilities, see "U.S. Franchised Electric and Gas" in Item 2. "Properties". Electric energy for USFE&G's customers is generated by three nuclear generating stations with a combined owned capacity...

  • Page 28
    ... issued its order approving the Certificate of Public Convenience and Necessity (CPCN) applications to construct a 620 MW combined cycle natural gas fired generating facility at each of Duke Energy Carolinas' existing Dan River Steam Station and Buck Steam Station. The Division of Air Quality (DAQ...

  • Page 29
    ...overall customer rate increase related to the project from an average of 19% to approximately 16%. The proposal is subject to the approval of the IURC in the Phase I hearings. On June 27, 2011, Duke Energy Indiana filed testimony with the IURC in connection with its seventh semi-annual rider request...

  • Page 30
    ... and Duke Energy Kentucky in 2011 and 2010 included planning assumptions to potentially retire, by 2015, certain coal-fired generating facilities in North Carolina, South Carolina, Indiana, Ohio and Kentucky that do not have the requisite emission control equipment, primarily to meet EPA regulations...

  • Page 31
    ..., Duke Energy Carolinas produced approximately 6,000 megawatt-hours (MWh) in solar generation for 2011 and 2010; no fuel costs are attributed to this generation. Coal. USFE&G meets its coal demand in the Carolinas and Midwest through a portfolio of long-term purchase contracts and short-term spot...

  • Page 32
    ...Plan (ESP), and Duke Energy Ohio began offering programs and billing a rate rider effective January 1, 2009. Save-a-watt was approved in Ohio through December 31, 2011. A shared-savings compensation mechanism was filed with the PUCO on July 20, 2011, with a proposed effective date of January 1, 2012...

  • Page 33
    ...2009, Duke Energy Ohio filed an application to establish rates for return of its SmartGrid net costs incurred for gas and electric distribution service through the end of 2008. The rider for recovering electric SmartGrid costs was approved by the PUCO in its order approving the ESP. Duke Energy Ohio...

  • Page 34
    ...2011 South Carolina Rate Case. In January 2012, the PSCSC approved a settlement agreement between Duke Energy Carolinas, the Office of Regulatory Staff (ORS), Wal-Mart Stores East, LP, and Sam's East, Inc. The terms of the agreement included an average 6.0% increase in retail and commercial revenues...

  • Page 35
    ... Financial Statements, "Regulatory Matters - Rate Related Information." Federal The FERC approves USFE&G's cost-based rates for electric sales to certain wholesale customers, as well as sales of transmission service. Regulations of FERC and the state utility commissions govern access to regulated...

  • Page 36
    ... charge collected from Duke Energy Ohio's retail customers through 2014. Commercial Power has fully hedged its forecasted coal-fired generation. Capacity revenues are 100% contracted in PJM through May 2015. For information on Commercial Power's generation facilities, see "Commercial Power" in Item...

  • Page 37
    ... the subsequent delivery of natural gas to its gas turbine generators. In general Commercial Power hedges its natural gas requirements using financial contracts. Physical gas is purchased in the spot market to meet generation needs. but include government-owned electric generating companies, local...

  • Page 38
    ... as Chief Generation Officer in July 2009 and his position as Chief Nuclear Officer in February 2008. Prior to that he served as Senior Vice President, Nuclear Support, Duke Energy Carolinas, LLC since January 2007; and prior to that he served as Vice President, Catawba Nuclear Station, since...

  • Page 39
    ... and provides regulated transmission and distribution services for natural gas to 500,000 customers. See Item 2. "Properties" for further discussion of Duke Energy Ohio's Franchised Electric and Gas generating facilities. Commercial Power. Commercial Power owns, operates and manages power plants and...

  • Page 40
    ...Environmental laws and regulations affecting the Duke Energy Registrants include, but are not limited to: •The Clean Air Act (CAA), as well as state laws and regulations impacting air emissions, including State Implementation Plans related to existing and new national ambient air quality standards...

  • Page 41
    ... costs. The Duke Energy Registrants' franchised electric businesses are regulated on a cost-of-service/rate-of-return basis subject to the statutes and regulatory commission rules and procedures of North Carolina, South Carolina, Ohio, Indiana and Kentucky. If the Duke Energy Registrants' franchised...

  • Page 42
    ...energy company; capital market conditions generally; market prices for electricity and gas; terrorist attacks or threatened attacks on Duke Energy's facilities or unrelated energy companies; or the overall health of the energy industry. The availability of credit under Duke Energy's revolving credit...

  • Page 43
    ...to increase costs of fuel and make additional related capital expenditures. In addition, the Duke Energy Registrants are generally responsible for on-site liabilities, and in some cases off-site liabilities, associated with the environmental condition of the Duke Energy Registrants' power generation...

  • Page 44
    ... some plants to become non-economical to operate; and •capacity and transmission service into, or out of, the Duke Energy Registrants' markets. Coal inventory levels have increased due to mild weather, low natural gas and power prices resulting in higher combined cycle gas-fired generation, and...

  • Page 45
    ... the Duke Energy Registrants' wholesale power marketing business. Duke Energy Ohio's membership in a RTO presents risks that could have a material adverse effect on its results of operations, financial condition and cash flows. The price at which Duke Energy Ohio can sell its generation capacity and...

  • Page 46
    ...of regulated energy and gas service could have a significant adverse financial impact on Duke Energy Carolinas and Duke Energy Indiana and their subsidiaries due to an impairment of assets, a loss of retail customers, lower profit margins or increased costs of capital. Duke Energy Carolinas and Duke...

  • Page 47
    ... and combining of fuel purchasing power. Achieving the anticipated benefits of the merger is subject to a number of uncertainties, including market conditions, risks related to Progress Energy's and Duke Energy's respective businesses, and whether the business of Progress Energy is integrated in...

  • Page 48
    ...legal, accounting, financial advisory, filing and printing costs, whether or not the merger is completed; and •matters relating to Duke Energy's merger with Progress Energy (including integration planning) may require substantial commitments of time and resources by Duke Energy's management, which...

  • Page 49
    ... gas/Fuel oil Natural gas/Fuel oil Natural gas/Fuel oil Natural gas/Fuel oil Solar Hydro Location SC SC NC NC NC SC NC NC NC SC NC SC NC NC SC NC NC NC SC SC SC NC NC NC NC NC/SC (a) This generation facility is jointly owned by Duke Energy Carolinas, along with North Carolina Municipal Power...

  • Page 50
    ... plant in service is mortgaged under the indenture relating to Duke Energy Carolinas', Duke Energy Ohio's and Duke Energy Indiana's various series of First Mortgage Bonds. COMMERCIAL POWER The following table provides information about Commercial Power's generation portfolio as of December 31, 2011...

  • Page 51
    ... throughout the Carolinas, Midwest and in Houston, Texas. In February 2009, Duke Energy entered into a lease for approximately 500,000 square feet of office space in Charlotte, North Carolina, that became its new corporate headquarters. ITEM 3. LEGAL PROCEEDINGS. For information regarding legal...

  • Page 52
    PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. Duke Energy's common stock is listed for trading on the New York Stock Exchange (NYSE) (ticker symbol DUK). As of February 21, 2012, there were approximately 152,530 common ...

  • Page 53
    ... 2009 2010 2011 Duke Energy Corporation S&P 500 Index Philadelphia Utility Index NYSE CEO Certification Duke Energy has filed the certification of its Chief Executive Officer and Chief Financial Officer pursuant to Section 302 of the SarbanesOxley Act of 2002 as exhibits to this Annual Report...

  • Page 54
    ... attributable to Duke Energy Corporation common shareholders Basic Diluted Dividends declared per share Balance Sheet Total assets Long-term debt including capital leases and VIEs, less current maturities 2011 $14,529 11,760 8 2,777 547 859 2,465 752 1,713 1 1,714 - 1,714 8 $ 1,706 3.2 2010 $14,272...

  • Page 55
    ... in Indiana, Ohio or Florida, the companies will continue to update the public services commissions in those states on the merger, as applicable and as required. The status of regulatory approvals is as follows: •On April 4, 2011, Duke Energy and Progress Energy, jointly filed applications with...

  • Page 56
    ... plan to address the FERC's market power concerns stated in the FERC's September 30, 2011 order. •On April 4, 2011, Duke Energy and Progress Energy filed a merger application and joint dispatch agreement with the NCUC. On September 2, 2011, Duke Energy, Progress Energy and the NC Public Staff...

  • Page 57
    ...renewable energy, customer energy efficiency, advanced nuclear power, advanced clean-coal and high-efficiency natural gas electric generating plants, and retirement of older less efficient coal-fired power plants. Due to upcoming environmental regulations, potential carbon legislation, air pollutant...

  • Page 58
    ... 30, 2012. These orders result in cumulative approved development costs of $350 million. Through December 31, 2011, Duke Energy Carolinas has incurred $261 million of development costs on this project. In July 2011, Duke Energy Carolinas signed a letter of intent with South Carolina Public Service...

  • Page 59
    ... and state level. Regulations, applicable to the electric power industry, have a significant impact on the nature of the businesses and the manner in which they operate. Duke Energy plans to file various rate cases with several state regulatory agencies during 2012. New legislation and changes to...

  • Page 60
    ... periods. Management uses this non-GAAP financial measure for planning and forecasting and for reporting results to the Board of Directors, employees, shareholders, analysts and investors concerning Duke Energy's financial performance. The most directly comparable GAAP measure for Adjusted Earnings...

  • Page 61
    ... and South Carolina rate cases at USFE&G; and •Increased results from the Midwest gas assets due to both volumes and price. Partially offset by •Increased operation and maintenance costs at USFE&G; •Lower volumes as a result of customer switching in Ohio, net of retention by Duke Energy Retail...

  • Page 62
    ... for funds used during construction (AFUDC) of $26 million due to additional capital spending for ongoing construction projects, and a $20 million Peru arbitration award. Year Ended December 31, 2010 as Compared to December 31, 2009. For 2010, consolidated other income and expenses increased $256...

  • Page 63
    ...operating) before deducting interest and taxes, and is net of the amounts attributable to noncontrolling interests related to those profits. Cash, cash equivalents and short-term investments are managed centrally by Duke Energy, so interest and dividend income on those balances, as well as gains and...

  • Page 64
    ... higher purchased power costs in Indiana, partially offset by decreased demand from electric retail customers in 2011 compared to the same period in 2010 mainly due to less favorable weather conditions, lower demand and fuel rates in Ohio and Kentucky from natural gas retail customers. Fuel revenues...

  • Page 65
    ...offset by lower fuel rates for electric retail customers in the Midwest and South Carolina, and lower natural gas fuel rates in Ohio and Kentucky. Fuel revenues represent sales to retail and wholesale customers; •A $54 million net increase in wholesale power revenues, net of sharing, primarily due...

  • Page 66
    ... of the save-a-watt program, higher customer service operations costs, higher benefit costs, higher nuclear, power and gas delivery maintenance costs, higher outage costs at fossil generation stations, and the disallowance in 2010 of a portion of previously deferred costs in Ohio related to the...

  • Page 67
    ... approved Duke Energy Ohio's new ESP in November 2011. The new ESP effectively separates the generation of electricity from Duke Energy Ohio's retail load obligation as of January 1, 2012. As a result, Commercial Power's coal-fired generation assets no longer serve retail load customers or receive...

  • Page 68
    ... ESP, higher wholesale margins due to increased generation volumes and PJM capacity revenues and mark-to-market gains on non-qualifying fuel and power hedge contracts in 2010 compared to losses in 2009. International Energy Years Ended December 31, Variance 2011 vs. 2010 $ 263 132 2 133 64 4 $ 193...

  • Page 69
    ... due to favorable contract prices and exchange rates in Brazil, arbitration award and higher margins in Peru, favorable hydrology in Central America, and higher equity earnings at NMC. Year Ended December 31, 2010 as Compared to December 31, 2009 Operating Revenues. The increase was driven primarily...

  • Page 70
    ... severance costs related to the 2010 voluntary severance plan and the consolidation of certain corporate office functions from the Midwest to Charlotte, North Carolina, donations of $56 million to the Duke Energy Foundation, which is a nonprofit organization funded by Duke Energy shareholders that...

  • Page 71
    ... January 2011, riders for the SAW program, and year-over-year impact related to a phase-in of the new retail rates resulting from the South Carolina rate case in the first quarter of 2010; and •A $23 million increase in wholesale power revenues, net of sharing, primarily due to increased capacity...

  • Page 72
    ... fuel revenues driven primarily by reduced sales volumes and lower natural gas costs; •A $39 million decrease related to less favorable weather conditions in 2011 compared to 2010; and 52 •A $23 million decrease in net mark-to-market revenues on non-qualifying power and capacity hedge contracts...

  • Page 73
    ... Ohio's retail customers through 2014. As a result, Duke Energy's operating revenues and net income will be negatively impacted. Duke Energy Ohio's gas-fired non-regulated generation assets earn capacity revenues from PJM. PJM capacity prices are determined through an auction process for planning...

  • Page 74
    ... higher fuel and purchased power costs; •A $32 million net increase in rate riders primarily related to the Edwardsport IGCC plant that is currently under construction and higher recoveries of demand side management (DSM) costs, partially offset by lower recoveries under the clean coal technology...

  • Page 75
    ... of its generation operations in November 2011 in conjunction with the approval of its new Electric Security Plan by the Public Utilities Commission of Ohio. The effect of this change was immaterial to the financial statements. Goodwill Impairment Assessments Duke Energy's goodwill balances are...

  • Page 76
    ... for the U.S. Franchised Electric and Gas reporting units include, but are not limited to, the use of an appropriate discount rate, estimated future cash flows and estimated run rates of operation, maintenance, and general and administrative costs, and expectations of returns on equity in each...

  • Page 77
    ... Financial Statements, "Goodwill, Intangible Assets and Impairments", in the third quarter of 2011, Commercial Power recorded $79 million of pre-tax impairment charges related to Clean Air Act emission allowances which were no longer expected to be used as a result of the new Cross State Air...

  • Page 78
    ... Unbilled retail revenues are estimated by applying an average revenue per kilowatt-hour (kWh) or per Mcf for all customer classes to the number of estimated kWh or Mcf delivered but not billed. Unbilled wholesale energy revenues are calculated by applying the contractual rate per megawatt-hour (mWh...

  • Page 79
    ...'s estimates of other post-retirement benefits. Funding requirements for defined benefit plans are determined by government regulations. Duke Energy made voluntary contributions to its defined benefit retirement plans of $200 million in 2011, $400 million in 2010 and $800 million in 2009. In 2012...

  • Page 80
    ... Financial Statements, "Employee Benefit Plans." LIQUIDITY AND CAPITAL RESOURCES Overview At December 31, 2011, Duke Energy had cash and cash equivalents and short-term investments of $2.3 billion, of which $1.0 billion is held in foreign jurisdictions and is forecasted to be used to fund...

  • Page 81
    ... of 2012. Even though bonus depreciation related to Duke Energy's regulated projects reduces rate base eligible for inclusion in future rates, the cash benefits will decrease Duke Energy's need for financings over time and help to mitigate future customer rate increases. Duke Energy's capitalization...

  • Page 82
    ... income adjusted for non-cash and non-operating items in 2010 as compared to 2009, •A $400 million decrease in contributions to company sponsored pension plans due to higher prior year contributions due to unfavorable equity market conditions, and •Changes in traditional working capital amounts...

  • Page 83
    ...commercial paper, as discussed above, as it matures, to fund capital expenditures in Duke Energy's unregulated businesses in the U.S. and for general corporate purposes. In May 2011, Duke Energy Carolinas issued $500 million principal amount of first mortgage bonds, which carry a fixed interest rate...

  • Page 84
    ... were used to fund capital expenditures and general corporate purposes, including the repayment at maturity of $500 million of senior notes and first mortgage bonds in the first half of 2010. In October 2009, Duke Energy Indiana refunded $50 million of tax-exempt variable-rate demand bonds through...

  • Page 85
    ... used to redeem commercial paper and for general corporate purposes. Credit Facilities In January 2009, Duke Energy Indiana refunded $271 million of tax-exempt auction rate bonds through the issuance of $271 million of tax-exempt variable-rate demand bonds, which are supported by direct-pay letters...

  • Page 86
    ... by Duke Energy and its principal funding subsidiaries. Senior Unsecured Credit Ratings Summary as of February 1, 2012 Standard and Poor's Duke Energy Corporation Duke Energy Carolinas, LLC Duke Energy Ohio, Inc. Duke Energy Indiana, Inc. Duke Energy Kentucky, Inc. BBB+ AAAAMoody's Investors Service...

  • Page 87
    ... services. Amount also includes contractual obligations for engineering, procurement and construction costs for new generation plants and nuclear plant refurbishments, environmental projects on fossil facilities, major maintenance of certain non-regulated plants, maintenance and day to day contract...

  • Page 88
    ... used to manage the Duke Energy Registrants commodity price exposure are either not designated as a hedge or do not qualify for hedge accounting. These instruments are referred to as undesignated contracts. Mark-to-market changes for undesignated contracts entered into by regulated businesses...

  • Page 89
    ... PJM. Duke Energy Ohio has fully hedged its forecasted coal-fired generation for 2012. Capacity revenues are 100% contracted in PJM through May 2015. International Energy generally hedges its expected generation using long-term bilateral power sales contracts when favorable market conditions exist...

  • Page 90
    ...gas businesses are commodity clearinghouses, regional transmission organizations, industrial end-users, marketers, distribution companies, municipalities, electric cooperatives and utilities located throughout the U.S. and Latin America. The Duke Energy Registrants have concentrations of receivables...

  • Page 91
    ... in Attiki. Duke Energy has an agreement to sell its ownership interest in Attiki. If all conditions of this agreement are met, Duke Energy expects the transaction to close in March 2012. At December 31, 2011, Duke Energy held $285 million of money market funds and short term investments in...

  • Page 92
    ... Carolinas, $48 million was funded by Duke Energy Ohio and $52 million was funded by Duke Energy Indiana. Duke Energy intends to contribute $200 million to its qualified pension plan in 2012. See Note 21 to the Consolidated Financial Statements, "Employee Benefit Plans," for additional information...

  • Page 93
    ... Source Performance Standards, or NSPS) for new fossil-fueled electric generating units and existing fossil-fueled electric generating units that undertake a major modification. The settlement agreement also required the EPA to issue on the same schedule emission guidelines for states for their use...

  • Page 94
    ... compliance costs incurred and MW to be retired may be materially different from these estimates based on the timing and requirements of the final EPA regulations. For additional information on other issues related to the Duke Energy Registrants, see Note 4 to the Consolidated Financial Statements...

  • Page 95
    ... the Duke Energy Registrants, the revised disclosure guidance is effective on a retrospective basis for interim and annual periods beginning January 1, 2013. Duke Energy is currently evaluating the potential impact of the adoption of this revised guidance and is unable to estimate at this time the...

  • Page 96
    ...REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of Duke Energy Corporation Charlotte, North Carolina We have audited the accompanying consolidated balance sheets of Duke Energy Corporation and subsidiaries (the "Company") as of December 31, 2011 and 2010, and the related...

  • Page 97
    ... revenues Operating Expenses Fuel used in electric generation and purchased power - regulated Fuel used in electric generation and purchased power - non-regulated Cost of natural gas and coal sold Operation, maintenance and other Depreciation and amortization Property and other taxes Goodwill...

  • Page 98
    PART II DUKE ENERGY CORPORATION Consolidated Balance Sheets December 31, (In millions) ASSETS Current Assets Cash and cash equivalents Short-term investments Receivables (net of allowance for doubtful accounts of $35 at December 31, 2011 and $34 at December 31, 2010) Restricted receivables of ...

  • Page 99
    ..., respectively Additional paid-in capital Retained earnings Accumulated other comprehensive (loss) income Total Duke Energy Corporation shareholders' equity Noncontrolling interests Total equity Total Liabilities and Equity See Notes to Consolidated Financial Statements 2011 2010 $ 1,433 154 273...

  • Page 100
    ... on notes receivable Purchases of emission allowances Sales of emission allowances Change in restricted cash Other Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from the: Issuance of long-term debt Issuance of common stock related to employee benefit plans...

  • Page 101
    ... Consolidated Statements of Equity and Comprehensive Income Duke Energy Corporation Shareholders Accumulated Other Comprehensive Income (Loss) Net Gains Pension and Common Additional Foreign (Losses) on OPEB Related Stock Common Paid-in Retained Currency Cash Flow Adjustments Shares Stock Capital...

  • Page 102
    ... We have audited the accompanying consolidated balance sheets of Duke Energy Carolinas, LLC and subsidiaries (the "Company") as of December 31, 2011 and 2010, and the related consolidated statements of operations, member's equity and comprehensive income, and cash flows for each of the three years...

  • Page 103
    ... ENERGY CAROLINAS, LLC Consolidated Statements of Operations Years Ended December 31, (In millions) Operating Revenues-Regulated Electric Operating Expenses Fuel used in electric generation and purchased power Operation, maintenance and other Depreciation and amortization Property and other taxes...

  • Page 104
    PART II DUKE ENERGY CAROLINAS, LLC Consolidated Balance Sheets December 31, (In millions) ASSETS Current Assets Cash and cash equivalents Receivables (net of allowance for doubtful accounts of $3 at December 31, 2011 and 2010) Restricted receivables of variable interest entities (net of allowance ...

  • Page 105
    PART II DUKE ENERGY CAROLINAS, LLC Consolidated Balance Sheets - (Continued) December 31, (In millions) LIABILITIES AND MEMBER'S EQUITY Current Liabilities Accounts payable Taxes accrued Interest accrued Current maturities of long-term debt Other Total current liabilities Long-term Debt Non-...

  • Page 106
    ... income taxes Contributions to qualified pension plans Accrued pension and other post-retirement benefit costs (Increase) decrease in Net realized and unrealized mark-to-market and hedging transactions Receivables Inventory Other current assets Increase (decrease) in Accounts payable Taxes accrued...

  • Page 107
    ... into earnings from cash flow hedges(a) Total comprehensive income Distributions to parent Balance at December 31, 2011 (a) Net of $2 tax expense in 2011, 2010 and 2009. (b) Net of $5 tax expense in 2010 and $3 tax benefit in 2009. See Notes to Consolidated Financial Statements Member's Equity...

  • Page 108
    ... PUBLIC ACCOUNTING FIRM To the Board of Directors of Duke Energy Ohio, Inc. Charlotte, North Carolina We have audited the accompanying consolidated balance sheets of Duke Energy Ohio, Inc. and subsidiaries (the "Company") as of December 31, 2011 and 2010, and the related consolidated statements...

  • Page 109
    ... natural gas Total operating revenues Operating Expenses Fuel used in electric generation and purchased power-regulated Fuel used in electric generation and purchased power-non-regulated Cost of natural gas sold Operation, maintenance and other Depreciation and amortization Property and other taxes...

  • Page 110
    PART II DUKE ENERGY OHIO, INC. Consolidated Balance Sheets December 31, (In millions) ASSETS Current Assets Cash and cash equivalents Receivables (net of allowance for doubtful accounts of $16 at December 31, 2011 and $18 at December 31, 2010) Inventory Other Total current assets Investments and ...

  • Page 111
    ...Liabilities Accounts payable Taxes accrued Interest accrued Current maturities of long-term debt Other Total current liabilities Long-term Debt Deferred Credits and Other Liabilities Deferred income taxes Investment tax credits Accrued pension and other post-retirement benefit costs Asset retirement...

  • Page 112
    ... redemption of long-term debt Notes payable and commercial paper Notes payable to affiliate Dividends to parent Other Net cash (used in) provided by financing activities Net (decrease) increase in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at...

  • Page 113
    ... AOCI(b) Total comprehensive loss Dividends to Parent Balance at December 31, 2009 Net loss Other comprehensive (loss) income Reclassification into earnings from cash flow hedges(a) Pension and OPEB related adjustments to AOCI(b) Total comprehensive loss Balance at December 31, 2010 Net income Other...

  • Page 114
    ... PUBLIC ACCOUNTING FIRM To the Board of Directors of Duke Energy Indiana, Inc. Charlotte, North Carolina We have audited the accompanying consolidated balance sheets of Duke Energy Indiana, Inc. and subsidiary (the "Company") as of December 31, 2011 and 2010, and the related consolidated statements...

  • Page 115
    ... ENERGY INDIANA, INC. Consolidated Statements of Operations Years Ended December 31, (In millions) Operating Revenues-Regulated Electric Operating Expenses Fuel used in electric generation and purchased power Operation, maintenance and other Depreciation and amortization Property and other taxes...

  • Page 116
    PART II DUKE ENERGY INDIANA, INC. Consolidated Balance Sheets December 31, (In millions) ASSETS Current Assets Cash and cash equivalents Receivables (net of allowance for doubtful accounts of $1 at December 31, 2011 and December 31, 2010) Inventory Other Total current assets Investments and Other ...

  • Page 117
    ... Liabilities Accounts payable Notes payable Taxes accrued Interest accrued Current maturities of long-term debt Other Total current liabilities Long-term Debt Deferred Credits and Other Liabilities Deferred income taxes Investment tax credits Accrued pension and other post-retirement benefit costs...

  • Page 118
    ... charges Deferred income taxes and investment tax credit amortization Contributions to qualified pension plans Accrued pension and other post-retirement benefit costs (Increase) decrease in Receivables Inventory Other current assets Increase (decrease) in Accounts payable Taxes accrued Other current...

  • Page 119
    ... from parent Balance at December 31, 2010 Net income Other comprehensive loss Reclassification into earnings from cash flow hedges(a) Total comprehensive income Balance at December 31, 2011 (a) Net of $1 tax benefit in 2011, 2010 and 2009. See Notes to Consolidated Financial Statements Common Stock...

  • Page 120
    ... 2011, Duke Energy Ohio applied regulatory accounting treatment to certain rate riders associated with retail generation of its Commercial Power operating segment. See Note 3 for information about business segments. Duke Energy Indiana is an indirect wholly-owned subsidiary of Duke Energy. Duke...

  • Page 121
    ... it is adjusted through fuel expense. In addition to the fuel adjustment clause, Duke Energy Indiana utilizes a purchased power tracking mechanism approved by the IURC for the recovery of costs related to certain specified purchases of power necessary to meet native load peak demand requirements to...

  • Page 122
    ... Duke Energy Energy Carolinas Ohio Indiana $476 240 - $716 $106 92 56 $254 $ 78 189 - $267 Materials and supplies $ 734 Coal held for electric generation 528 Natural gas 56 Total Inventory $1,318 Effective November 1, 2011, Duke Energy Ohio executed an agreement with a third party to transfer...

  • Page 123
    ... 2011 Duke Duke Energy Carolinas(a) Duke Energy Ohio Duke Energy Indiana (a) Excludes nuclear fuel. 2010 3.2% 2.7% 4.1% 3.5% 2009 3.3% 2.0% 3.8% 4.2% Energy(a) 3.2% 2.6% 3.5% 3.4% When the Duke Energy Registrants retire their regulated property, plant and equipment, it charges the original cost...

  • Page 124
    ...the Commercial Power segment. Additionally, Duke Energy Ohio, including Duke Energy Kentucky, and Duke Energy Indiana sell, on a revolving basis, a portion of their retail and wholesale accounts receivable to CRC. These transfers meet sales/derecognition criteria and therefore, Duke Energy Ohio and...

  • Page 125
    ...Energy Carolinas, Duke Energy Ohio and Duke Energy Indiana employees participate in Duke Energy's qualified, non-qualified and other post-retirement benefit plans and are allocated their proportionate share of benefit costs by Duke Energy. See Note 21 for information related to Duke Energy's benefit...

  • Page 126
    ... of income tax expense over the estimated useful lives of the related properties. Duke Energy Carolinas, Duke Energy Ohio and Duke Energy Indiana entered into a tax sharing agreement with Duke Energy, where the separate return method is used to allocate tax expenses and benefits to the subsidiaries...

  • Page 127
    ... ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, INC. Combined Notes to Consolidated Financial Statements - (Continued) Subsidiary Registrants would incur if the Subsidiary Registrants were a separate company filing their own federal tax return...

  • Page 128
    ... tests for 2011. The following new accounting standards were adopted by Duke Energy during the year ended December 31, 2010 and the impact of such adoption, if applicable has been presented in the accompanying Consolidated Financial Statements: ASC 860 - Transfers and Servicing. In June 2009, the...

  • Page 129
    ... for transfers of financial assets occurring on or after January 1, 2010, and early adoption of this statement was prohibited. Since 2002, Duke Energy Ohio, Duke Energy Indiana, and Duke Energy Kentucky have sold, on a revolving basis, nearly all of their accounts receivable and related collections...

  • Page 130
    ...DUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, INC. Combined Notes to Consolidated Financial Statements - (Continued) transactions within the scope of ASC 805. The revised guidance of ASC 805 changed the accounting for income taxes related...

  • Page 131
    ... Open Access Transmission Tariff (OATT). On September 30, 2011, the FERC conditionally approved the merger, subject to approval of mitigation measures to address its finding that the combined company could have an adverse effect on competition in wholesale power markets in the Duke Energy Carolinas...

  • Page 132
    ...ENERGY CAROLINAS, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, INC. Combined Notes to Consolidated Financial Statements - (Continued) without prejudice to the right to refile them if Duke Energy and Progress Energy decide to file another mitigation plan to address the FERC's market power...

  • Page 133
    ... CAROLINAS, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, INC. Combined Notes to Consolidated Financial Statements - (Continued) No assurances can be given as to the timing of the satisfaction of all closing conditions or that all required approvals will be received. The Merger Agreement...

  • Page 134
    ... Duke Energy Carolinas, certain regulated portions of Duke Energy Ohio including Duke Energy Kentucky and Duke Energy Indiana. Commercial Power owns, operates and manages power plants and engages in the wholesale marketing and procurement of electric power, fuel and emission allowances related...

  • Page 135
    ...in South Carolina effective February 1, 2010. On July 8, 2009, the PUCO approved a $55 million annual increase in rates for electric delivery service. These new rates were effective July 13, 2009. Additionally, on December 29, 2009, the KPSC approved a $13 million increase in annual base natural gas...

  • Page 136
    ...annual base rate increase in South Carolina effective February 1, 2010. (b) During 2010, a $99 million expense was recorded related to the 2010 voluntary severance plan (see Note 19). Duke Energy Ohio Duke Energy Ohio has two reportable operating segments, Franchised Electric and Gas and Commercial...

  • Page 137
    ...(f) Duke Energy Ohio earned approximately 24% and 13% of its consolidated operating revenues from PJM Interconnection, LLC (PJM) in 2011 and 2010, respectively. These revenues relate to the sale of capacity and electricity from Commercial Power's gas-fired non-regulated generation assets. In 2009 no...

  • Page 138
    ... II DUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, INC. Combined Notes to Consolidated Financial Statements - (Continued) Duke Energy Indiana Duke Energy Indiana has one reportable operating segment, Franchised Electric, which generates...

  • Page 139
    PART II DUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, INC. Combined Notes to Consolidated Financial Statements - (Continued) Duke Energy Registrants' Regulatory Assets and Liabilities: As of December 31, 2011 (in millions) Regulatory ...

  • Page 140
    ...DUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, INC. Combined Notes to Consolidated Financial Statements - (Continued) As of December 31, 2010 (in millions) Regulatory Assets(a) Vacation accrual Under-recovery of fuel costs Post-in-service...

  • Page 141
    ... states. Non-regulated sellers of gas and electric generation are also allowed to operate in Ohio once certified by the PUCO. The FERC approves rates for electric sales to wholesale customers served under cost-based rates, as well as sales of transmission service. Duke Energy Ohio Standard Service...

  • Page 142
    ... the 2009 North Carolina Rate Case. The NCUC approved the settlement agreement in full by order dated January 27, 2012. Duke Energy Carolinas South Carolina Rate Case. On August 5, 2011, Duke Energy Carolinas filed a rate case with the PSCSC to request an average 15% increase in retail revenues, or...

  • Page 143
    ...Public Service Authority (Santee Cooper) and South Carolina Electric & Gas Company (SCE&G). Any change in ownership interest, output allocation, sharing of costs or control and any future option agreements concerning Lee Nuclear Station shall be subject to prior approval of the PSCSC. The NRC review...

  • Page 144
    ..., LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, INC. Combined Notes to Consolidated Financial Statements - (Continued) Station and Buck Steam Station. The Division of Air Quality (DAQ) issued a final air permit authorizing construction of the Buck and Dan River combined cycle natural gas...

  • Page 145
    ... customer rate increase related to the project from an average of 19% to approximately 16%. The proposal is subject to the approval of the IURC in the Phase I hearings. On November 30, 2011, Duke Energy Indiana filed a petition with the IURC in connection with its eighth semi-annual rider request...

  • Page 146
    ... and Duke Energy Kentucky in 2011 and 2010 included planning assumptions to potentially retire by 2015, certain coal-fired generating facilities in North Carolina, South Carolina, Indiana, Ohio and Kentucky that do not have the requisite emission control equipment, primarily to meet EPA regulations...

  • Page 147
    ...Midwest ISO approved MVP proposals with estimated project costs of approximately $5.2 billion prior to the date of Duke Energy Ohio's exit from the Midwest ISO on December 31, 2011. These projects are expected to be undertaken by the constructing transmission owners from 2012 through 2020 with costs...

  • Page 148
    PART II DUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, INC. Combined Notes to Consolidated Financial Statements - (Continued) On December 29, 2011, Midwest ISO filed with FERC a Schedule 39 to the Midwest ISO's tariff. Schedule 39 ...

  • Page 149
    ...Energy Carolinas, Duke Energy Ohio and Duke Energy Indiana are subject to federal, state and local regulations regarding air and water quality, hazardous and solid waste disposal and other environmental matters. These regulations can be changed from time to time, imposing new obligations on the Duke...

  • Page 150
    ... the Duke Energy Registrants' coal-fired power plants. On June 21, 2010, the EPA issued a proposal to regulate, under the Resource Conservation and Recovery Act, coal combustion residuals (CCR), a term the EPA uses to describe the CCPs associated with the generation of electricity. The EPA proposal...

  • Page 151
    ... of an Administrative Consent Order entered into in 1998 between the EPA and Cinergy relating to alleged violations of Ohio's State Implementation Plan provisions governing particulate matter at Duke Energy Ohio's W.C. Beckjord Station. On May 29, 2009, the court issued its remedy ruling for...

  • Page 152
    ...the IURC suspend the procedural schedule to allow it time to do a solicitation for capacity options to compare to the proposed conversion of Gallagher Units 1 and 3 to natural gas. On December 28, 2011, the IURC granted Duke Energy Indiana's request to recover the costs associated with the Gallagher...

  • Page 153
    PART II DUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, INC. Combined Notes to Consolidated Financial Statements - (Continued) held on April 19, 2011. On June 20, 2011, the Supreme Court held that the Second Court of Appeals decision ...

  • Page 154
    ...II DUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, INC. Combined Notes to Consolidated Financial Statements - (Continued) purchased generation assets from the state. On August 10, 2011, a judge granted an ex parte injunction ordering DEIGP...

  • Page 155
    ... plant. In March, 2008, two environmental groups, Appalachian Voices and the Canary Coalition, filed suit against the Federal government challenging the tax credits awarded to incentivize certain clean coal projects. Although Duke Energy was not a party to the case, the allegations center on the tax...

  • Page 156
    ...Cincinnati Gas & Electric Company), conspired to provide inequitable and unfair price advantages for certain large business consumers by entering into non-public option agreements with such consumers in exchange for their withdrawal of challenges to Duke Energy Ohio's pending Rate Stabilization Plan...

  • Page 157
    ...to Duke Energy Carolinas). The Duke Energy Registrants expense legal costs related to the defense of loss contingencies as incurred. Duke Energy Indiana Prosperity Mine, LLC. On October 12, 2009, Prosperity Mine, LLC (Prosperity) filed for arbitration under an Agreement for the Sale and Purchase of...

  • Page 158
    ... all of USFE&G's electric and gas plant in service is mortgaged under the mortgage bond indentures of Duke Energy Carolinas, Duke Energy Ohio and Duke Energy Indiana. (b) Includes $1,515 million and $1,540 million of Duke Energy tax-exempt bonds as of December 31, 2011 and 2010, respectively. As of...

  • Page 159
    ... letter of credit. Duke Energy Indiana (in millions) Unsecured debt First mortgage bonds(a) Capital leases Money pool borrowings(b) Tax-exempt bonds(c) Unamortized debt discount and premium, net Total debt Notes payable Current maturities of long-term debt Total long-term debt WeightedAverage Rate...

  • Page 160
    ... II DUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, INC. Combined Notes to Consolidated Financial Statements - (Continued) Unsecured Debt. In November 2011, Duke Energy issued $500 million of senior notes, which carry a fixed interest rate...

  • Page 161
    ... DUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, INC. Combined Notes to Consolidated Financial Statements - (Continued) In September 2010, Duke Energy Carolinas converted $100 million of tax-exempt variable-rate demand bonds, to tax-exempt...

  • Page 162
    ... basis Duke Energy Carolinas sells certain accounts receivable, arising from the sale of electricity and/or related services as part of Duke Energy Carolinas' franchised electric business, to DERF. In order to fund its purchases of accounts receivable, DERF has a $300 million secured credit facility...

  • Page 163
    ...)(a)(b) Duke Energy (Parent) Facility Size(c) Less: Notes Payable and Commercial Paper(d) Outstanding Letters of Credit Tax-Exempt Bonds Available Capacity $1,250 (75) (51) - $1,124 Duke Energy Carolinas $1,250 (300) (7) (95) $ 848 Duke Energy Ohio $800 - (27) (84) $689 Duke Energy Indiana $ 700...

  • Page 164
    ...II DUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, INC. Combined Notes to Consolidated Financial Statements - (Continued) December 31, 2010 (in millions) Tax exempt bonds(a)(b)(c)(d) Notes payable and Commercial paper(e) DERF(f) Total Duke...

  • Page 165
    ...II DUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, INC. Combined Notes to Consolidated Financial Statements - (Continued) 7. GUARANTEES AND INDEMNIFICATIONS Duke Energy and its subsidiaries have various financial and performance guarantees...

  • Page 166
    ... 31, 2011 Consolidated Balance Sheets is as follows: Ownership Share Property, Plant, and Equipment Accumulated Depreciation Construction Work in Progress (in millions) Duke Energy Duke Energy Carolinas Production: Catawba Nuclear Station (Units 1 and 2)(a) Duke Energy Ohio Production: Miami...

  • Page 167
    PART II DUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, INC. Combined Notes to Consolidated Financial Statements - (Continued) retirement of specific assets and are recognized in the period in which the liability is incurred, if a ...

  • Page 168
    ... assets retirement obligations associated with nuclear decommissioning(b) 2011 $2,060 2010 $2,014 As the NCUC and the PSCSC require that Duke Energy Carolinas update its cost estimate for decommissioning its nuclear plants every five years, new site-specific nuclear decommissioning cost studies...

  • Page 169
    ...ENERGY CAROLINAS, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, INC. Combined Notes to Consolidated Financial Statements - (Continued) 10. PROPERTY, PLANT AND EQUIPMENT December 31, 2011 (in millions) Land Plant - Regulated Electric generation, distribution and transmission(a) Natural gas...

  • Page 170
    ... CORPORATION • DUKE ENERGY CAROLINAS, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, INC. Combined Notes to Consolidated Financial Statements - (Continued) The following table presents capitalized interest, which includes the debt component of AFUDC, for the years ended December 31, 2011...

  • Page 171
    ... power to retail customers under the ESP, which utilizes rates approved by the PUCO through 2011. These rates in 2010 were above market prices for generation services, resulting in customers switching to other generation providers. As discussed in Note 4, Duke Energy Ohio will establish a new...

  • Page 172
    ... Ohio in 2009, Duke Energy provides power to retail customers under an ESP, which utilized rates approved by the PUCO through 2011. These rates were above market prices for generation services. The low levels of market prices impacted price forecasts and placed uncertainty over the pricing of power...

  • Page 173
    ... pre-tax impairment charges related to certain non-regulated generating assets in the Midwest to write-down the value of these assets to their estimated fair value. 153 The fair value of Duke Energy Ohio's Ohio T&D reporting unit for which an impairment was recorded was determined using significant...

  • Page 174
    ...by USFE&G and Commercial Power. Amortization expense for gas, coal and power contracts, wind development rights and other intangible assets for the years ended December 31, 2011, 2010 and 2009 was: (in millions) Duke Energy Duke Energy Ohio Duke Energy Indiana 2011 $10 8 1 2010 $24 20 1 2009 $25 23...

  • Page 175
    ... CORPORATION • DUKE ENERGY CAROLINAS, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, INC. Combined Notes to Consolidated Financial Statements - (Continued) Other Impairments. As a result of project cost overages related to the Edwardsport IGCC plant, Duke Energy Indiana recorded pre-tax...

  • Page 176
    PART II DUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, INC. Combined Notes to Consolidated Financial Statements - (Continued) Impairments. There were no significant pre-tax impairment charges to the carrying value of investments in ...

  • Page 177
    ... 2010 $ 10 242 248 $256 $252 Other Related Party Amounts Years Ended December 31, Duke Energy Carolinas Duke Energy Carolinas engages in related party transactions, which are generally performed at cost and in accordance with the applicable state and federal commission regulations. Balances due...

  • Page 178
    ... increase in Member's Equity as a result of forgiveness of an advance by its parent, Duke Energy. Duke Energy Ohio Duke Energy Ohio engages in related party transactions, which are generally performed at cost and in accordance with the applicable state and federal commission regulations. Balances...

  • Page 179
    ... Ohio paid dividends to its parent, Cinergy of $485 million and $360 million, respectively. Duke Energy Indiana Duke Energy Indiana engages in related party transactions, which are generally performed at cost and in accordance with the applicable state and federal commission regulations. Balances...

  • Page 180
    ...the cost of the coal and natural gas used to generate electricity, the prices of electricity in wholesale markets, the cost of capacity required to purchase and sell electricity in wholesale markets and the cost of emission allowances primarily at the Duke Energy Registrants' coal fired power plants...

  • Page 181
    ... Indiana uses derivative contracts as economic hedges to manage the market risk exposures that arise from electric generation. Undesignated contracts at December 31, 2011 are primarily associated with forward purchases and sales of power, forward purchases of natural gas and financial transmission...

  • Page 182
    ... II DUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, INC. Combined Notes to Consolidated Financial Statements - (Continued) below. For additional information on notional dollar amounts of debt subject to derivative contracts accounted for...

  • Page 183
    ... Earnings Commodity contracts Fuel used in electric generation and purchased power-non-regulated Interest rate contracts Interest expense Total Pre-tax Losses Reclassified from AOCI into Earnings 2011 2010 (88) $(88) 2 $2 $ 5 $ - $ 6 $ - - (5) $ (5) 2 (5) $(3) Duke Energy Ohio Year Ended...

  • Page 184
    ...31, 2011. (b) Amounts relate to interest rate swaps at Duke Energy Carolinas. Duke Energy Ohio (in millions) Location of Pre-Tax Gains and (Losses) Recognized in Earnings Commodity contracts Revenue, non-regulated electric and other Fuel used in electric generation and purchased power-non-regulated...

  • Page 185
    ... ENERGY CAROLINAS, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, INC. Combined Notes to Consolidated Financial Statements - (Continued) The following table shows information with respect to derivative contracts that are in a net liability position and contain objective credit-risk related...

  • Page 186
    PART II DUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, INC. Combined Notes to Consolidated Financial Statements - (Continued) frequency and volume to provide ongoing pricing information. Duke Energy does not adjust quoted market prices on...

  • Page 187
    ... DUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, INC. Combined Notes to Consolidated Financial Statements - (Continued) Duke Energy The following tables provide the fair value measurement amounts for assets and liabilities recorded on Duke...

  • Page 188
    ... 2011: Revenue, non-regulated electric, natural gas, and other Total Year Ended December 31, 2010 Balance at January 1, 2010 Total pre-tax realized and unrealized losses included in earnings: Revenue, non-regulated electric, natural gas, and other Fuel used in electric generation and purchased power...

  • Page 189
    ... II DUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, INC. Combined Notes to Consolidated Financial Statements - (Continued) Available-for- Sale Auction Rate Securities Year Ended December 31, 2009 Balance at January 1, 2009 Total pre-tax...

  • Page 190
    PART II DUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, INC. Combined Notes to Consolidated Financial Statements - (Continued) Total Fair Value Amounts at December 31, 2010 $ 12 1,365 649 62 2,088 (1) $2,087 (in millions) Description ...

  • Page 191
    ... Credits and Other Liabilities on the Consolidated Balance Sheets. Year Ended December 31, 2010 Balance at January 1, 2010 Total pre-tax realized and unrealized gains (losses) included in earnings: Revenue, non-regulated electric and other Fuel used in electric generation and purchased power...

  • Page 192
    ...CAROLINAS, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, INC. Combined Notes to Consolidated Financial Statements - (Continued) Derivatives (net) Pre-tax amounts included in the Consolidated Statements of Operations related to Level 3 measurements outstanding at December 31, 2010: Revenue...

  • Page 193
    ...DUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, INC. Combined Notes to Consolidated Financial Statements - (Continued) Rollforward of Level 3 measurements (in millions) Year Ended December 31, 2011 Balance at January 1, 2011 Total pre-tax...

  • Page 194
    PART II DUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, INC. Combined Notes to Consolidated Financial Statements - (Continued) At both December 31, 2011 and December 31, 2010, the fair value of cash and cash equivalents, accounts and notes...

  • Page 195
    ... using excess cash from its foreign operations. These investments are classified as Short-Term Investments on the balance sheet and are available for current operations of Duke Energy's foreign business. During the year ended December 31, 2011, Duke Energy received proceeds on sales of auction rate...

  • Page 196
    PART II DUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, INC. Combined Notes to Consolidated Financial Statements - (Continued) For the years ended December 31, 2011 and 2009, a pre-tax gain of $6 million and $7 million, respectively were ...

  • Page 197
    ... • DUKE ENERGY CAROLINAS, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, INC. Combined Notes to Consolidated Financial Statements - (Continued) As of December 31, 2011 Estimated Fair Value Equity Securities Corporate Debt Securities Municipal Bonds U.S. Government Bonds Auction Rate Debt...

  • Page 198
    ... required. Duke Energy Duke Energy Carolinas Duke Energy Receivables Financing LLC (DERF) (in millions) At December 31, 2011 VIE Balance Sheets Restricted Receivables of VIEs Other Current Assets Intangibles, net Restricted Other Assets of VIEs Other Assets Property, Plant and Equipment Cost, VIEs...

  • Page 199
    .... CRC was formed in order to secure low cost financing for Duke Energy Ohio, including Duke Energy Kentucky, and Duke Energy Indiana. Duke Energy Ohio and Duke Energy Indiana sell on a revolving basis at a discount, nearly all of their customer accounts receivable and related collections to CRC. The...

  • Page 200
    ... the purchase price (typically approximates 25% of the total proceeds). The amount borrowed by CRC against these receivables is non-recourse to the general credit of Duke Energy, and the associated cash collections from the accounts receivable sold is the sole source of funds to satisfy the related...

  • Page 201
    PART II DUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, INC. Combined Notes to Consolidated Financial Statements - (Continued) NON-CONSOLIDATED VIEs The table below shows the VIEs that the Duke Energy Registrants do not consolidate and how...

  • Page 202
    ...or discount rates is not material due to the short turnover of receivables and historically low credit loss history. Interest accrues to Duke Energy Ohio, Duke Energy Indiana and Duke Energy Kentucky on the retained interests using the accretable yield method, which generally approximates the stated...

  • Page 203
    ... of subordinated financial support. The most significant activities that impact DukeNet's economic performance relate to its business development and fiber optic capacity marketing and management activities. The power to direct these activities is jointly and equally shared by Duke Energy and Alinda...

  • Page 204
    ... ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, INC. Combined Notes to Consolidated Financial Statements - (Continued) The following table illustrates Duke Energy's basic and diluted EPS calculations and reconciles the weighted-average number...

  • Page 205
    ... by Duke Energy's shared services affiliate. Balance at December 31, 2010 $87 21 1 Balance at Provision/ Cash December 31, Adjustments Reductions 2011 $(2) (2) - $(53) (18) (1) $32 1 - Duke Energy's 2010 Long-Term Incentive Plan (the 2010 Plan) reserved 75 million shares of common stock for awards...

  • Page 206
    ... and outstanding under the 2010 Plan and the 2006 Plan generally vest over periods from immediate to three years. The following table includes information related to Duke Energy's phantom stock awards. Shares awarded (in thousands) Years ended December 31, 2011 2010 2009 4.6 $41 1,907 1,047 1,096...

  • Page 207
    ... information about stock-based performance awards outstanding at the maximum level at December 31, 2011: Weighted Average Per Share Grant Date Fair Value 21. EMPLOYEE BENEFIT PLANS Duke Energy Defined Benefit Retirement Plans Duke Energy and its subsidiaries (including legacy Cinergy businesses...

  • Page 208
    ... II DUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, INC. Combined Notes to Consolidated Financial Statements - (Continued) Duke Energy's policy is to fund amounts on an actuarial basis to provide assets sufficient to meet benefit payments...

  • Page 209
    ... increase (graded by age) 2011 5.10 4.40 2011 Net Periodic Benefit Cost Discount rate Salary increase Expected long-term rate of return on plan assets 5.00 4.10 8.25 2010 5.00 4.10 2010 5.50 4.50 8.50 2009 5.50 4.50 2009 6.50 4.50 8.50 The following table provides the amounts related to Duke Energy...

  • Page 210
    PART II DUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, INC. Combined Notes to Consolidated Financial Statements - (Continued) Other Changes in Plan Assets and Projected Benefit Obligations Recognized in Regulatory Assets, Regulatory ...

  • Page 211
    ... CORPORATION • DUKE ENERGY CAROLINAS, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, INC. Combined Notes to Consolidated Financial Statements - (Continued) The discount rate used to determine the current year pension obligation and following year's pension expense is based on a bond...

  • Page 212
    ...2012. Assumptions Used for Other Post-Retirement Benefits Accounting As of December 31, (percentages) Determined Benefit Obligations Discount rate 2011 5.10 2011 Net Periodic Benefit Cost Discount rate Expected long-term rate of return on plan assets Assumed tax rate(a) 5.00 2010 5.00 2010 5.50 2009...

  • Page 213
    ... II DUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, INC. Combined Notes to Consolidated Financial Statements - (Continued) Plan Assets Master Retirement Trust. Assets for both the qualified pension and other post-retirement benefits are...

  • Page 214
    PART II DUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, INC. Combined Notes to Consolidated Financial Statements - (Continued) Fair Value Measurements. The accounting guidance for fair value defines fair value, establishes a framework for ...

  • Page 215
    ... ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, INC. Combined Notes to Consolidated Financial Statements - (Continued) The following table provides the fair value measurement amounts for VEBA I other post-retirement assets at December 31, 2011...

  • Page 216
    ... information related to Duke Energy Carolinas' contributions to Duke Energy's qualified defined benefit pension plans. Years Ended December 31, (in millions) Contributions made Anticipated contributions 2012 - $66 2011 $33 - 2010 $158 - 2009 $158 - (in millions) Regulatory assets, net increase...

  • Page 217
    ...4.40 2011 Net Periodic Benefit Cost Discount rate Salary increase Expected long-term rate of return on plan assets 5.00 4.10 8.25 2010 5.00 4.10 2010 5.50 4.50 8.50 2009 5.50 4.50 2009 6.50 4.50 8.50 (in millions) Change in Projected Benefit Obligation Obligation at prior measurement date Transfers...

  • Page 218
    ... CORPORATION • DUKE ENERGY CAROLINAS, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, INC. Combined Notes to Consolidated Financial Statements - (Continued) Amounts Recognized in the Consolidated Balance Sheets: Non-Qualified Pension Plans The following table provides the amounts related...

  • Page 219
    PART II DUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, INC. Combined Notes to Consolidated Financial Statements - (Continued) Reconciliation of Funded Status to Accrued Other Post-Retirement Benefit Costs As of and for the Years Ended ...

  • Page 220
    ... DUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, INC. Combined Notes to Consolidated Financial Statements - (Continued) Expected Benefit Payments: Defined Benefit Retirement Plans The following table presents Duke Energy's expected benefit...

  • Page 221
    PART II DUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, INC. Combined Notes to Consolidated Financial Statements - (Continued) Components of Net Periodic Pension Costs as allocated by Duke Energy: Qualified Pension Plans For the Years ...

  • Page 222
    PART II DUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, INC. Combined Notes to Consolidated Financial Statements - (Continued) Additional Information: Qualified Pension Plans Information for Plans with Accumulated Benefit Obligation in ...

  • Page 223
    ... each of the years ended December 31, 2011, 2010 and 2009 of regulatory asset amortization resulting from purchase accounting adjustments associated with Duke Energy's merger with Cinergy in April 2006. Other Changes in Plan Assets and Projected Benefit Obligations Recognized in Accumulated Other...

  • Page 224
    ... in 2012. Assumptions Used for Other Post-retirement Benefits Accounting (percentages) Benefit Obligations Discount rate Net Periodic Benefit Cost Discount rate Expected long-term rate of return on plan assets 2011 2010 2009 $ 5 $ 52 5 51 6 51 6 50 6 51 27 271 Employee Savings Plans Duke Energy...

  • Page 225
    PART II DUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, INC. Combined Notes to Consolidated Financial Statements - (Continued) Duke Energy uses a December 31 measurement date for its defined benefit retirement plan assets and obligations. ...

  • Page 226
    ... by Duke Energy: Non-Qualified Pension Plans Duke Energy Indiana's non-qualified pension plan pre-tax net periodic pension benefit costs, as allocated by Cinergy, were insignificant for the years ended December 31, 2011, 2010 and 2009. Other Changes in Plan Assets and Projected Benefit Obligations...

  • Page 227
    PART II DUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, INC. Combined Notes to Consolidated Financial Statements - (Continued) The following table provides the amounts related to Duke Energy Indiana's non-qualified pension plans that are ...

  • Page 228
    PART II DUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, INC. Combined Notes to Consolidated Financial Statements - (Continued) Reconciliation of Funded Status to Accrued Other Post-Retirement Benefit Costs As of and for the Years Ended ...

  • Page 229
    ...federal and state income tax returns. These subsidiaries have a tax sharing agreement with Duke Energy where the separate return method is used to allocate tax expenses and benefits to the subsidiaries whose investments or results of operations provide these tax expenses and benefits. The accounting...

  • Page 230
    ...II DUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, INC. Combined Notes to Consolidated Financial Statements - (Continued) For the Year Ended December 31, 2010 Duke Energy $ (5) 39 125 159 639 83 20 742 Duke Energy Carolinas $ 3 (2) - 1 388...

  • Page 231
    PART II DUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, INC. Combined Notes to Consolidated Financial Statements - (Continued) Reconciliation of Income Tax Expense at the U.S. Federal Statutory Tax Rate to the Actual Tax Expense from ...

  • Page 232
    ... CORPORATION • DUKE ENERGY CAROLINAS, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, INC. Combined Notes to Consolidated Financial Statements - (Continued) Tax Credits and NOL Carryforwards (in millions) Description Investment Tax Credits Alternative Minimum Tax Credits Federal NOL State...

  • Page 233
    ... DUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, INC. Combined Notes to Consolidated Financial Statements - (Continued) Changes to Unrecognized Tax Benefits For the Year Ended December 31, 2011 Duke Energy Duke Energy Carolinas Duke Energy...

  • Page 234
    ... statements of operations and the consolidated balance sheets: Duke Energy Duke Energy Carolinas Duke Energy Ohio Duke Energy Indiana (in millions) December 31, 2011 Net interest income recognized related to income taxes Net interest expense recognized related to income taxes Interest receivable...

  • Page 235
    ...are pre-tax unless otherwise noted. (In millions) 2011 Edwardsport IGCC impairment (see Note 4) Emission Allowance impairment (see Note 12) Energy efficiency revenue adjustment(a) Total 2010 Voluntary severance program expenses (see Note 19) Commercial Power non-regulated Midwest generation goodwill...

  • Page 236
    ... II DUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, INC. Combined Notes to Consolidated Financial Statements - (Continued) Duke Energy Ohio (In millions) 2011 Operating revenues Operating income Net income 2010 Operating revenues Operating...

  • Page 237
    PART II DUKE ENERGY CORPORATION Schedule I - Condensed Parent Company Financial Statements Condensed Statements of Operations Years Ended December 31, (In millions, except per-share amounts) Operating Revenues Operating Expenses Operating Loss Equity in Earnings of Subsidiaries Other Income and ...

  • Page 238
    ... II DUKE ENERGY CORPORATION Schedule I - Condensed Parent Company Financial Statements Balance Sheets December 31, (In millions, except per-share amounts) ASSETS Current Assets Cash and cash equivalents Receivables Other Total current assets Investments and Other Assets Notes receivable Investment...

  • Page 239
    ... common stock related to employee benefit plans Payments for the redemption of long-term debt Notes payable and commercial paper Notes Payable due to affiliate Dividends paid Other Net cash provided by (used in) financing activities Net increase in cash and cash equivalents Cash and cash equivalents...

  • Page 240
    ... from the issuance will be used to fund capital expenditures in Duke Energy's unregulated businesses in the U.S. and for general corporate purposes. In August 2011, Duke Energy issued $500 million principal amount of senior notes, which carry a fixed interest rate of 3.55% and mature September...

  • Page 241
    ... quarter of 2011, for general corporate purposes, which is classified as Notes payable and commercial paper on Duke Energy's Condensed Consolidated Balance Sheets. In November 2011, Duke Energy entered into a new $6 billion, five-year master credit facility, with $4 billion available at closing and...

  • Page 242
    ...Cash (Used in) Provided by Operating Activities on the Condensed Statements of Cash Flows. During the year ended December 31, 2011, Duke Energy paid a $15 million advance to Cinergy Corp. for Green Frontier Windpower LLC PTC funding contributions. During the year ended December 31, 2010, Duke Energy...

  • Page 243
    PART II DUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, INC. Schedule II - Valuation and Qualifying Accounts and Reserves Combined Notes to Consolidated Financial Statements - (Continued) Duke Energy Additions: Balance at Beginning of ...

  • Page 244
    PART II DUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, INC. Schedule II - Valuation and Qualifying Accounts and Reserves Combined Notes to Consolidated Financial Statements - (Continued) Duke Energy Carolinas Additions: Balance at ...

  • Page 245
    PART II DUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, INC. Schedule II - Valuation and Qualifying Accounts and Reserves Combined Notes to Consolidated Financial Statements - (Continued) Duke Energy Ohio Additions: Balance at Beginning of...

  • Page 246
    PART II DUKE ENERGY CORPORATION • DUKE ENERGY CAROLINAS, LLC • DUKE ENERGY OHIO, INC. • DUKE ENERGY INDIANA, INC. Schedule II - Valuation and Qualifying Accounts and Reserves Combined Notes to Consolidated Financial Statements - (Continued) Duke Energy Indiana Additions: Balance at Beginning...

  • Page 247
    ... the Chief Executive Officer and Chief Financial Officer, the Duke Energy Registrants have evaluated changes in internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the fiscal quarter ended December 31, 2011...

  • Page 248
    ..., EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE. Duke Energy will provide information that is responsive to this Item 10 in its definitive proxy statement or in an amendment to this Annual Report not later than 120 days after the end of the fiscal year covered by this Annual Report, in either case...

  • Page 249
    ... services to Duke Energy Corporation (Duke Energy) and its consolidated subsidiaries for 2011 and 2010. A portion of these costs have been allocated to Duke Energy Carolinas, LLC (Duke Energy Carolinas), Duke Energy Ohio, Inc. (Duke Energy Ohio) and Duke Energy Indiana, Inc. (Duke Energy Indiana...

  • Page 250
    ... Years Ended December 31, 2011, 2010 and 2009 Report of Independent Registered Public Accounting Firm Duke Energy Carolinas, LLC: Consolidated Financial Statements Consolidated Statements of Operations for the Years Ended December 31, 2011, 2010 and 2009 Consolidated Balance Sheets as of December 31...

  • Page 251
    ... thereunto duly authorized. Date: February 28, 2012 DUKE ENERGY CORPORATION (Registrants) By: /s/ JAMES E. ROGERS James E. Rogers Chairman, President and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following...

  • Page 252
    ...the undersigned, thereunto duly authorized. Date: February 28, 2012 DUKE ENERGY CAROLINAS, LLC (Registrant) By: /s/ JAMES E. ROGERS James E. Rogers Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons...

  • Page 253
    ... the undersigned, thereunto duly authorized. Date: February 28, 2012 DUKE ENERGY OHIO, INC. (Registrant) By: /s/ JAMES E. ROGERS James E. Rogers Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on...

  • Page 254
    ...of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Date: February 28, 2012 DUKE ENERGY INDIANA, INC. (Registrant) By: /s/ JAMES E. ROGERS James E. Rogers Chief Executive Officer Pursuant to the...

  • Page 255
    ... to the Commission a copy of any omitted schedules or exhibits upon request on all items designated by a triple asterisk (***). Exhibit Number Duke Energy Carolinas Duke Energy Ohio Duke Energy Indiana Duke Energy 2.1 Agreement and Plan of Merger, dated as of May 8, 2005, as amended as of July...

  • Page 256
    ...2003, File No. 1-3543). Original Indenture (First Mortgage Bonds) between Duke Energy Ohio, Inc. and The Bank of New York (as Trustee) dated as of August 1, 1936 (filed with Registration Statement of Duke Energy Ohio, Inc. (formerly The Cincinnati Gas & Electric Company) File No. 2-2374). Fourteenth...

  • Page 257
    PART IV Exhibit Number Duke Energy Duke Energy Carolinas Duke Energy Ohio Duke Energy Indiana 4.2.2 Forty-fourth Supplemental Indenture between PSI and LaSalle National Bank dated March 15, 1990 (filed with Form 10-K of Duke Energy Indiana, Inc. (formerly PSI Energy, Inc.) for the year ended ...

  • Page 258
    ... Duke Energy Duke Energy Carolinas Duke Energy Ohio Duke Energy Indiana 4.3 Repayment Agreement between Duke Energy Ohio, Inc. and The Dayton Power and Light Company dated as of December 23, 1992 (filed with Form 10-K of Duke Energy Ohio, Inc. (formerly The Cincinnati Gas & Electric Company...

  • Page 259
    ... Energy Duke Energy Carolinas Duke Energy Ohio Duke Energy Indiana 4.7 Loan Agreement between Duke Energy Ohio, Inc. and the State of Ohio Air Quality Development Authority dated August 1, 2001 (filed with the Form 10-Q of Duke Energy Ohio, Inc. (formerly The Cincinnati Gas & Electric Company...

  • Page 260
    ... Carolinas Duke Energy Ohio Duke Energy Indiana 4.13 Loan Agreement between Duke Energy Ohio, Inc. and the Ohio Air Quality Development Authority dated as of November 1, 2004, relating to Series A (filed with the Form 8-K of Duke Energy Ohio, Inc. (formerly The Cincinnati Gas & Electric Company...

  • Page 261
    ... to Purchase and Sale Agreement, dated as of May 4, 2006, by and among Duke Energy Americas, LLC, LS Power Generation, LLC (formerly known as LSP Bay II Harbor Holding, LLC), LSP Gen Finance Co, LLC, LSP South Bay Holdings, LLC, LSP Oakland Holdings, LLC, and LSP Morro Bay Holdings, LLC (filed...

  • Page 262
    ...effective December 17, 2003 to Employment Agreement dated October 11, 2002, among Cinergy Corp., Services, Duke Energy Ohio, Inc., and Duke Energy Indiana, Inc., and William J. Grealis (filed with Form 10-K of Duke Energy Ohio, Inc. (formerly The Cincinnati Gas & Electric Company) for the year ended...

  • Page 263
    ...New York Branch and Credit Suisse, as CoDocumentation Agents (filed with the Form 8-K of the registrant, July 5, 2007, File No. 1-4928, as Exhibit 10.1). Amended and Restated Employment Agreement dated September 12, 2002, among Cinergy Corp., Services, Duke Energy Ohio, Inc., and Duke Energy Indiana...

  • Page 264
    ... effective December 17, 2003 to Employment Agreement dated September 24, 2002, among Cinergy Corp., Services, Duke Energy Ohio, Inc., and Duke Energy Indiana, Inc., and James L. Turner (filed with Form 10-K of Duke Energy Ohio, Inc. (formerly The Cincinnati Gas & Electric Company) for the year ended...

  • Page 265
    ... Number Duke Energy Duke Energy Carolinas Duke Energy Ohio Duke Energy Indiana 10.26 Engineering, Procurement and Construction Agreement, dated July 11, 2007, by and between Duke Energy Carolinas, LLC and Stone &Webster National Engineering P.C. (filed with the Form 10-Q of the registrant...

  • Page 266
    ...Form of Performance Share Award Agreement (filed with Form 8-K of Duke Energy Corporation, File No. 1-32853, April 4, 2006, as Exhibit 10.2). Eighty-Eighth Supplemental Indenture dated as of November 17, 2008, between Duke Energy Carolinas, LLC and The Bank of New York Mellon Trust Company, N.A., as...

  • Page 267
    ... Agreement, dated April 10, 2006, between Duke Capital LLC and Duke Energy Ohio, Inc. (filed with Form 10-K of Duke Energy Ohio, Inc. (formerly The Cincinnati Gas & Electric Company), filed on April 14, 2006, File No. 1-1232). $2,000,000,000 Amended and Restated Credit Agreement among the registrant...

  • Page 268
    ...Exhibit Number Duke Energy Duke Energy Carolinas Duke Energy Ohio Duke Energy Indiana 10.54 Purchase and Sale Agreement by and among Cinergy Capital & Trading, Inc., as Seller, and Fortis Bank, S.A./N.V., as Buyer, dated as of June 26, 2006 (filed with Form 8-K of Duke Energy Corporation, File...

  • Page 269
    ...650,000,000 Amended and Restated Credit Agreement, dated as of June 28, 2007, among Duke Energy Corporation, Duke Energy Carolinas, LLC, Duke Energy Ohio, Inc., Duke Energy Indiana, Inc. and Duke Energy Kentucky, Inc., as Borrowers, the banks listed therein, Wachovia Bank, National Association, as...

  • Page 270
    ... Number Duke Energy Duke Energy Carolinas Duke Energy Ohio Duke Energy Indiana 10.72.1 Amendment No. 1 to Amended and Restated Credit Agreement (filed in Form 8-K of Duke Energy Corporation, March 12, 2008, File No. 132853, as Exhibit 10.1). Engineering, Procurement and Construction Agreement...

  • Page 271
    ... Exhibit 10.1). Retirement Agreement dated December 9, 2010 between James L. Turner and Duke Energy Business Services LLC (filed on Form 8-K of Duke Energy Corporation, December 9, 2010, File No. 1-32583 as Exhibit 10.1). Form of Performance Award Agreement of Duke Energy Corporation (filed on Form...

  • Page 272
    ... of Duke Energy Corporation, Duke Energy Carolinas, LLC, Duke Energy Indiana, Inc. and Duke Energy Ohio, Inc., November 25, 2011, File No. 1-01232, as Exhibit 10.1). Form of Performance Award Agreement of Duke Energy Corporation under the Duke Energy Corporation 2010 Long-Term Incentive Plan (filed...

  • Page 273
    ... to sign the annual report on behalf of the registrant and certain of its directors and officers. Certified copy of resolution of the Board of Directors of the registrant authorizing power of attorney. Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of...

  • Page 274
    ... Shareholders will be: Date: Time: Place: Thursday, May 3, 2012 10 a.m. O.J. Miller Auditorium Energy Center 526 South Church Street Charlotte, NC 28202 Financial Publications Duke Energy's annual report and related financial publications can be found on our website at www.duke-energy.com/investors...

  • Page 275
    ... do. Caring: We look out for each other. We strive to make the environment and communities around us better places to live. Integrity: We do the right thing. We honor our commitments. We admit when we're wrong. Openness: We're open to change and to new ideas from our co-workers, customers and other...